The impact of Carey pensions case on the Sipp market

The prospects of multiple Fos claims have already pushed more than one Sipp provider into administration and I fear more will follow despite this judgment.

That in turn is likely to put further demands on the Financial Services Compensation Scheme.

Recently Liberty Sipp has gone into administration apparently on the back of the weight of the potential Fos claims. Interestingly, in April, I noted on the FSCS website regarding Liberty the following warning: “For FSCS to be able to pay your claim we must prove that Liberty Sipp Ltd failed in its due diligence – in other words, did Liberty Sipp Ltd do certain checks on the non-standard investments that would hold their customers’ pension funds before accepting them into its Sipp investment portfolio?

“Did it make sure they were appropriate for a Sipp, and did it identify any potential issues with them? Also, if it did identify potential issues, did it tell the customer?”

How does that square with the Carey judgment?

It appears to me that the FCA may have found it convenient for CMCs to pursue providers via the Fos and then the FSCS, so that the whole industry, including the adviser community, ends up paying.

It will be interesting to see if in future determinations the Fos reassesses what is “fair and reasonable”.

However, much will depend on the outcome of the expected appeal in the Adams case.  

Watch this space.

John Moret is principal of MoretoSipps